ICRA, a domestic rating agency of India has declared that the affordable housing segment expected to grow to an extent of about 30%. It also said that affordable housing plans will also be the most important factor in the growth of housing finance market in India.
The government has its concentration on affordable housing plans and it has taken a number of initiatives for the same under the Pradhan Mantri Aawas Yojana (PMAY). Initiatives are also being taken to taken into the consideration, both the supply and demand side, and also the issues of affordability. This will attract the borrowers thoroughly.
After the move of demonetization, the defaults in the self-employed segments and affordable housing segments had increased because of the self-employed segment being affected the most post demonetization.
Defaults are assumed to increase even further in affordable housing plans and self-employed segments.
Property price post demonetization is likely to get affected, if we consider the expected correction of prices of property. The gross NPAs (Non-Performing Assets) for Housing Finance Companies (HFCs) are expected to remain only in the range of 0.9 to 1.3 per cent.
Housing finance market in India has witnessed a considerable downfall in their incremental funding costs in the latter half of the financial year. HFCs raising funds at medium rates of 7.5-8% could supposedly be the reason behind this.